Hi Ho, Hi Ho, It's Off to School We Go - 2017
I think most college students will agree that going off to school may involve some fun but it's basically going to be their job for at least a few years. That said, borrowing today's title from the Disney movie Snow White and the Seven Dwarfs seems appropriate since it's the song the dwarfs sing as they head out to work at the mine. While I don't think most students expect to locate diamonds like those for which the dwarfs are digging, I do think most expect to find the means of earning a living buried somewhere amidst the dirt and rocks of their post-secondary education.
With another school year about to begin, I thought it might be helpful to offer some financial planning tips to consider as part of the pre-departure check list. Incidentally, if parts of this article seem familiar, it's an update of one I sent a few years ago.
Books. As syllabi become available for various classes, you might want to consider trying to save money by shopping for used textbooks. Many campus bookstores now sell used books and three of the best used textbook websites are BigWords, EFollet & ECampus. Amazon, eBay and Half Price Books offer used textbooks for sale themselves or by owner. Chegg rents and sells textbooks, buys them back and allows use of an e-version of many books while the order is in transit. And, in a testament to the ingenuity of the American student, non-profit Text Book Revolution features information about, and links to, many free textbooks.
Data Safety. No one plans to lose their wallet at home or at school but it does happen, so it's best to be prepared. One simple safety measure is to photograph all of its contents (front and back) with your cell phone. Many phones now offer cloud storage in case something should happen to the phone itself and we're happy to keep a copy at our office too.
Today's students are probably more conscious of electronic security issues than I am but a computer that seems safe enough without password protection at home might need a strong password when taken to school. Passwords are obviously a security issue and there's new thinking about them, as described in this recent Wall Street Journal article.
The potential for laptop or tablet theft is also worth considering. I've subscribed to LoJack for Laptops for several years and believe the benefits of data protection and probable recovery are well worth the $40 per year. That company also offers protective services for cell phones but there are free choices as well. iPhones have built-in features that make add-ons less important but users of Android-based phones might want to check out reviews for avast! and other phone finder apps. Knowing that the contents of your wallet or other important information is on your phone makes back-up and security that much more important.
Medical Issues. No one plans on needing medical care either but it might become necessary. Be sure your student is still included on your insurance plan (under the ACA, they can be as old as 26) or that you've made other arrangements. Be sure all ID cards are up to date and any prescriptions are on file at the pharmacy so refills can be obtained with an email or phone call. Many schools offer health coverage for their students and those plans are often a good deal.
We recommend that everyone eighteen or older have Durable and Medical Powers of Attorney, along with an Advanced Medical Directive. These sometimes go by other names but are the documents necessary for one person to make business (DPoA) and medical (MPoA) decisions for another. The Advanced Directive (a/k/a Living Will) clearly states the person's wishes regarding heroic life-sustaining measures. Because original documents are not required, we add them to our clients' web vaults for easy access. We're also glad to burn them (and a brief health history) to a business card-sized CD which can be carried at all times. We don't charge either clients or non-clients for these small CDs. Of course, photographing them with your cell phone may work too but if you're incapacitated, who will access them for you?
Property Insurance. Check with your agent, but most homeowner's policies provide coverage for a student's possessions while at school, living either on or off campus. Both dorms and apartments can be dangerous places for electronic hardware, so it would be a good idea to make sure valuable items are appropriately protected. Total family coverage is generally capped at a percentage all household property, so be sure to confirm your own policy's limits. If they seem too low, it might make sense to schedule an expensive item (identify it specifically) to be sure it's covered. These valuable item riders are usually quite inexpensive.
Although personal property located in off-campus housing probably is covered under a homeowner's policy, liability is almost certainly not. Renter's insurance is easily available through your local agent but she or he probably can't write the coverage if the student is located out of state. You might want to go to your insurance company's website and find an agent near the campus or simply contact a conveniently located independent local agent. Some companies, USAA for example, can sell insurance directly regardless of where you (or your student) live.
If your student has a vehicle at school, be sure all insurance details are up to date and easily accessible in case of an accident. Saving a cell phone picture of the front and back of the insurance card might be the easiest way to keep that info handy. A cell phone is also a good way to record any details of an accident - physical damage, skid marks, etc. - and obviously to contact the police if there's injury or significant property damage. Someone who's involved in his or her first accident may not be thinking clearly, so it might be a good idea to go over these details before your student leaves for school. We suggest that, regardless of what seems to have happened, no one ever make a statement admitting fault. Let your insurance company work that out.
Paying for college. Again this year, Indiana residents have the option of putting up to $5000 into a Section 529 college savings plan and receiving a credit of up to $1000 against their 2017 taxes. The money can be left invested or checks can be written immediately to pay for school-related expenses. This 20% tax credit is a year-by-year decision made by the legislature but is certainly worth taking advantage of, even if your college student is a senior or in grad school. Go to College Choice Direct to sign up or obtain further details.
Presumably by this time, some sort of college financing has been worked out. According to student loan provider Sallie Mae, 27% of the cost of college is paid for by household (parental) borrowing. A wide range of loan options is available and we suggest you begin shopping for next year's needs sometime this winter.
The FAFSA is a key element in obtaining grants and other free aid to help pay for college. The form must be updated every year and the process should be started in January to be sure of meeting priority filing deadlines. We have considerable experience with these and may be able to help get them completed more quickly. In the case of younger siblings, we can sometimes suggest a more strategic distribution of assets to optimize that student's eligibility for assistance.
In closing, we actually enjoy our work here at WWA Planning & Investments and don't think of ourselves as heading off to the mines every morning. Please feel free to get in touch if you think we might be able to help you work out any college issues.